The government has responded to calls from business and union leaders to do more to help manufacturers out of their current crisis.

At the manufacturing summit being held in Birmingham the CBI and the TUC urged the government to give financial support to manufacturing to stem job losses.

In her address to the statement, trade and industry secretary Patricia Hewitt pledged £20 million as part of drive to spread excellence throughout the troubled sector.

Manufacturing has been in recession for months following a series of economic problems. The first series of redundancies were due to the strength of the pound, which was then followed by the global economic downturn which has been further exacerbated by the US terror attacks.

"Where business and unions agree on good ideas to raise productivity then the government should look to back them. That's why I am pleasedto announce today an extra £20 million to support a key recommendation from the CBI-TUC work on best practice, boosting measures which we alreadyknow to work well," said Hewitt.

The minister also conceded: "These are very tough times for manufacturers and manufacturing workers, many of whom are facing redundancies as a direct result of the global economic slowdown."

She said membership of the euro could help to alleviate difficulties caused by Sterling's exchange rate with Europe's single currency.

"British membership of a successful single currency offers us potential benefits in terms of trade, transparency, costs and currency stability, which is why we support it in principle," she said.

Hewitt heard from both sides of industry about measures needed to reverse a long-term decline in what is being described by the unions as "a desperate cry for help".

TUC general secretary John Monks told the conference: "Our manufacturing industry gets less support per worker than almost any other European economy, yet it is suffering and shrinking."

CBI director general Digby Jones called on the minister to help create the new industries that will be vital for the 21st century.

"We need to swap the old caricature of the 19th century metal bashers for one of 21st century world beaters. Ministers must acknowledge that manufacturing is essential rather than optional to a healthy economy," he said.

Roger Lyons, general secretary of the manufacturing science and finance union told the meeting that millions of manufacturing jobs have been lost since 1979, with 10,000 a month being axed since 1997.

"The summit must not go down in history as a talking shop. It must start a process that reverses the status of the sector. The solutions must include financial support for survival in the short-term. Thousands of workers are looking to the summit to deliver radical measures to support industry," he said.